In her first day leading the umbrella group for unions, Frances O’Grady warns the economy is sick and the Government’s medicine is not working

The Tories are the “nasty” party for reducing the living standards of the poorest while calling them scroungers, the new TUC general secretary claims today.

In her first day leading the umbrella group for unions, which represents more than six million workers, Frances O’Grady warns the economy is sick and the Government’s medicine is not working.

She says: “We were told that short-term pain would deliver long-term gain, yet all we see are nasty side-effects with no sign of a cure.

“What is worse is that we now seem to be locked into a vicious downward spiral of cuts.

"They are not working so the government cuts even more.

“Reducing the living standards of some of the poorest and most vulnerable in society, while attempting to tar them all as scroungers, is perhaps the very definition of a party determined to be seen as nasty.”

Ms O’Grady outlines three top priorities for the year ahead:-

* Urge the government to abandon the austerity measures and cuts that are doing more harm than good and put investment in jobs and growth first.

* Create a long-term vision for the economy with a new industrial policy, including investment in the country’s infrastructure, affordable homes and transport and forge a laser-like focus on the need to create decent jobs and apprenticeships.

* Build a fair society – one where we really are all in it together with the poorest paid the Living Wage, more done to stop tax avoidance and evasion, and workers’ given a say on bosses’ pay.

But Bob Crow, general secretary of the RMT rail union, warns of “all out class struggle” in the fight against the Tory-led Coalition’s cuts and austerity drive.

He said:“We head into the New Year with the clearest warning that unless the labour movement ups its game, and puts meat on the bone of the TUC decision to generalise and coordinate strike action, jobs, services, living standards and workers rights all face a 12-month battering from this rotten government of the rich, for the rich.

“We pledge to make 2013 the year that we step up the class fightback against the gang of rich kids forcing their policy of austerity down workers throats.”

And John Taylor, chief executive of the arbitration and conciliation service ACAS, warns that 2013 will see increasing “tensions and conflicts” over pay caused by long-term austerity measures.

He said pressure on employers to keep wage costs under control could clash with demands from workers to catch up with the cost of living.

“If inflation and interest rates rise then this will increase wage demands. If the private sector meets these demands through increases in the level of pay settlements then the public sector could see pressure for their pay to catch up after periods of restraint,” he said.

Bosses will face the challenge of motivating and engaging staff in ways other than pay, such as offering more flexible working arrangements.

ACAS will publish a new code on flexible working in the new year after the Government announced it would be extending the right to request the measure to all workers, not just parents and carers.

Mr Taylor says outsourcing of work will also continue next year, leaving employers further down the subcontracting chain having less control over the terms and conditions of staff and adds that employers need to develop channnels for “employee voice” to air concerns early before serious problems arise.